Morgan & Westfield Brochure

www.morganandwestfield.com | 1-888-mwestfield

© 2009 Morgan & Westfield


Congratulations on the decision to sell your business. Though it can be one of life’s most stressful

events, it can also be one of the most rewarding.

You’ve invested far too much money, time and energy in this special endeavor to leave

a profitable sale to chance. It should be carefully planned and managed by an experienced

professional broker--someone who understands every phase and nuance of the process and will

work diligently to ensure that you are properly rewarded.

There’s an old saying in the brokerage business: “one buyer is no buyer”. Meaning that to

maximize your selling price it’s necessary to generate many buyers and let the “market”

determine the price. At Morgan & Westfield, we pledge not only maximize buyer exposure but

also the return on your sale, and to make your entire experience as smooth and stress free

as possible. To that end, we handle all 200 multi-disciplinary tasks necessary to successfully

complete the deal--from helping prepare legal and financial documents to working with lenders

and escrow officers.

Unlike others, our company is solely focused on brokering businesses. We take what’s called a

“boutique” approach, which means that we’re very selective about the sellers we partner with.

This allows us to give each one our full attention, support and guidance, from the beginning of

the sale to the end.

Morgan & Westfield uses a proven, systematic process that’s based on a unique combination

of knowledge, confidentiality, marketing, objectivity and negotiation. Nothing is left to chance

so there are no costly or unwanted surprises. Only positive, profitable results that satisfy your

every expectation. Because we represent you on contingency, we don’t accept upfront listing or

marketing fees. In fact, our “success” fee isn’t paid until your sale is successfully completed.

Thanks again for considering Morgan & Westfield. Let us know if you have any questions.

www.morganandwestfield.com

Dear Business Owner,

Best regards,

Morgan & Westfield

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At Morgan & Westfield, our mission is to serve you with utmost attention and professionalism. Following each sale, our brokers conduct a “post-mortem” or post-sale analysis to see how we can improve our effectiveness and methods of selling businesses. Your concerns are very important to us, so please take a moment or two to share them with us, rating the importance of each using the checklist below.

seller concerns

On a scale of 1 to 5, a 1 is of little importance to you, and a 5 is of vital importance. Please rate each item independently so that we may clearly understand your concerns in each individual area.

concern: 1(low) 2 3 4 5(high)

• Buyer Qualifications [ ] [ ] [ ] [ ] [ ]

• Full Price [ ] [ ] [ ] [ ] [ ]

• Amount of Cash Down Pmt. [ ] [ ] [ ] [ ] [ ]

• Confidentiality [ ] [ ] [ ] [ ] [ ]

• Closing Costs [ ] [ ] [ ] [ ] [ ]

• How the Business is Shown [ ] [ ] [ ] [ ] [ ]

• Advertising [ ] [ ] [ ] [ ] [ ]

• How new owner continues [ ] [ ] [ ] [ ] [ ]

• Speed of Sale [ ] [ ] [ ] [ ] [ ]

• Ease of Sale [ ] [ ] [ ] [ ] [ ]

• Other Concerns:

Comments:

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Standard Representation Servicesvaluation • preparation • presentation • negotiation • and more

As a business owner, you’ve devoted an incredible amount of time, resources and energy to building and nurturing an enterprise that may well represent your life’s work. If you’re considering selling, now is the time to consult the professional business intermediaries at Morgan & Westfield.

Through experience, integrity, objectivity and multi-disciplinary expertise we can prepare you and your business for a smooth, timely, litigation-free transaction that minimizes risk and maximizes your return.

No-cost, Exploratory

The first two items below are free services designed to help you decide whether to sell your business now or to postpone it until later. If you wait, we can still help you maximize your company’s value and prepare it for a future sale, when conditions may be more favorable.

Ask your broker for complete details.



FrEE sErvicE #1: rEcastiNG FiNaNcial statEMENts

Step one in determining your company’s true value.

The first step in accurate valuation is getting a clear picture of your current financial position (including tax liability) and determining your business’s actual income. We can help you achieve this by converting the company’s net profit to something called “Seller’s Discretionary Earnings.”

• Total compensation of a single owner/operator• Adjusting excessive owners wages to market value• Annual depreciation and amortization (non-cash) expenses • Interest and non-recurring expenses• Expenses and perks unrelated to business operations, such as owner health and life insurance, travel, entertainment and personal auto expenses

Seller’s Discretionary Earnings is defined as pre-tax business net profit, PLUS:

Armed with these figures, you can make a more well-informed selling decision. If you decide that now is the time, we will prepare a FREE, no-obligation business valuation (see below) to aid in the process.

FrEE sErvicE #2: valUiNG tHE BUsiNEss

Setting and getting the price you want.

Today’s buyers are better educated about pricing than ever before. If you’re serious about selling, your price must be realistic and in line with the company’s true value. At Morgan & Westfield, we believe in setting a proper, defensible price right from the start—one that results in the most expeditious and profitable sale possible. To present your business’s value in a way that’s meaningful to buyers, this free, comprehensive service covers:

• Computer prepared pricing, based on over 50 key factors• Identification of primary value drivers• Professionally bound, 30-35-page report, featuring 8-12 different valuation methods • A suggested range of prices – low, medium, and high• Comps from highly regarded industry databases — BizComps and Pratts Stats• Analysis of operations, competitors, cash flow, ROI and debt-service

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cErtiFiED BUsiNEss appraisal sErvicEs

Available for a fee through Morgan & Westfield’s trusted resource network

Because independent, third-party valuations have sometimes resulted in a higher asking price and a quicker sale, some buyers consider them more attractive than broker-initiated valuations. If you prefer this type of service, two companies we regularly recommend are:

• Business Evaluation Systems• Gulf Coast Financial • Strategic Value Analysis • Formal Valuation • M&A Valuation • IRS Revenue Ruling 59-60 • May be deducted from commission at closing

FrEE prEparatory cHEcklist

If you decide to temporarily delay the sale of your business, we will provide, at no cost, a customized pre-sale checklist for you to help prepare for a future sale, including recommendations for assuring the highest possible selling price.

arraNGiNG BaNk FiNaNciNG

To attract more and better-paying buyers

Financing the sale is critical to getting your deal done. If we can pre-approve the business for bank financing you may be able to cash out 100% at closing. Part of the added value offered by Morgan & Westfield is access to a nationwide network of progressive, business-friendly institutions solely dedicated to business brokers and their sellers. If you decide to obtain loan pre-approval, we can recommend several different lenders to help assure the most favorable rates, terms and buyer qualifications.



DraFtiNG rEprEsENtatioN DocUMENts

Establishing and explaining the seller/intermediary relationship

Once you select Morgan & Westfield as your business broker, your representative will prepare documents that clearly define our working relationship, including disclosures, responsibilities and expectations. These include:

• A Representation agreement• Agency disclosure• Seller’s disclosure statement

prEpariNG prE-salE DocUMENtatioN

Expediting due diligence to facilitate a quick sale

To sell your business quickly, you must anticipate the buyer’s (as well as lender’s) informational requests and have all the necessary documents readily available. Doing so makes you appear to buyers and bankers like a committed seller who’s serious about closing the sale. To ensure timely, efficient replies to all qualified prospects, your Morgan & Westfield broker will work closely with you to assemble and organize copies of the most commonly requested pre- and post-offer documentation. A partial list of examples includes:

• Your business/marketing plans and most recent business appraisal• An interim financial statement with prior year comparison (or gross revenues)• Three years of Federal tax returns and P/L statements• Your business license, lease summary and franchise agreements• F, F & E List

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packaGiNG tHE BUsiNEss

Expediting due diligence. Satisfying buyer demands.

Buyers are a rightfully cautious group that require honest answers and full disclosure before moving forward with a purchase.

Why are you selling the business? Which accounting method do you use? Who are your primary competitors and where do they advertise? How much do you owe suppliers? What are your licensing requirements?

The secret to expediting your sale is anticipating buyers’ questions and concerns, and compiling into one document, answers they need to make a confident, fully informed decision. As our partner, you’re entitled to receive the Morgan & Westfield Business Summary and Valuation, a comprehensive, professionally bound report that saves time and limits post-sale litigation by succinctly answering buyers’ most frequent pre-purchase questions. Typically 25-50 pages in length, your fully customized summary will:

• Increase the likelihood of a swift, problem-free sale• Clearly spell out buyer qualifications and licensing requirements to discourage unqualified buyers• Detail lease terms and other information to eliminate misunderstandings and post-offer deal killers• Highlight your business’ primary value drivers

MarkEtiNG tHE BUsiNEss

Confidentially promoting your firm to the largest possible audience

Intelligent, targeted, full-scale marketing is vital to receiving top dollar for your business. To maximize the selling price, you must expose your business to a large universe of highly qualified prospects.

Morgan & Westfield takes a proven, global approach designed to attract buyers from around the world. We package your business to appeal to both first-time buyers and industry pros who may be willing to pay more if synergistic value is perceived. As always, we exercise the utmost care and consideration in maintaining confidentiality and will never publicly publish your company’s name.

• Preparation of Marketing Plan• Ad composition and placement• Listing your company on 30+ international Web sites• Special search engine optimization techniques• Direct mail and (if appropriate) fax campaigns

Our marketing services include:



prEscrEENiNG prospEctivE BUyErs

Separating serious prospects from curious tire kickers

A large percentage of prospective buyers are casual lookie-loos who never make a purchase. Many lack the financial resources to get the deal done. That’s why Morgan & Westfield places so much emphasis on prospect pre-screening. Weeding out unqualified buyers not only saves you time and headaches, it allows you to focus on running your company and preparing it for sale — an effort which, our experience shows, ultimately helps maximize your selling price.

Our brokers respond to all buyer requests within one business day with both an email and at least three phone calls. Many brokers simply email the buyer, with messages often never reaching the buyer. To protect your interests and streamline the evaluation process, we carefully prepare the following documents for the qualified prospect:

• Non-Disclosure Agreement• Buyer Interview & Profile• Buyer Financial Summary• Credit Report and Score — obtained if requested by seller

EDUcatiNG prospEcts

Educating buyers and setting realistic expectations

Though some buyers know what they want in a business purchase, the vast majority don’t. Many lack entrepreneurial experience and are unschooled in even basic business principles, further compounding the seller’s challenge.

To facilitate a smooth, trouble-free transaction, your Morgan & Westfield broker will help educate these buyers about key aspects of the purchase process, including pricing, valuation, due diligence requirements and more.

• Are often told by their accountants to pay 20-30% of what a business is actually worth?• Frequently expect to see sellers’ bank statements and tax returns, and talk to employees before making an offer?• Expect to submit a non-binding letter of intent instead of an offer with an earnest money deposit?• Often focus exclusively on the financials and little else when evaluating a business?

DiD yoU kNow tHat BUyErs:

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In addition to education, we offer several ways to help serious buyers purchase a business, including:

• Credit clean-up: we have sources that can permanently remove negative items from a buyer’s credit report • Financing: we can help prepare buyer to apply for favorable bank financing• Alternate cash sources: we can show buyers how to unlock the purchasing power of other capital sources, including retirement and 401 (k) funds• Discretionary reminders: where needed, we will remind buyers about the necessity of confidentiality

Morgan & Westfield’s Buyer Assistance Services

sHowiNG & NEGotiatiNG

Representing your interests every step of the way

Personal chemistry, unchecked emotions and simple misunderstandings have derailed countless transactions, leaving buyers and sellers equally frustrated and unsatisfied.

As your intermediary, we assume a neutral, unemotional position that maximizes our influence and objectivity and allows us to act as a buffer between you and the buyer. In addition to negotiating critical pre-offer considerations, we’ll also:

• Prepare you for the all-important Buyer/Seller meeting, including a detailed discussion of the buyer’s purchasing profile and hot buttons • Interpret and assess buyer’s true purchasing interest and intent • Obtain objective buyer feedback about your business’s purchase appeal• Deal only with prospects who understand and are willing to pay fair-market value



prEpariNG tHE pUrcHasE aGrEEMENt

You manage your business, we’ll handle the details

For seller convenience and security, an Asset Purchase Agreement (with refundable earnest money deposit) trumps a non-binding Letter of Intent every time. On your behalf, your Morgan & Westfield broker will handle this and other critical details vital to a successful purchase, including:

• Drafting a Basic Agreement and addenda• Creating a Transaction Timeline and Due Diligence Checklist—a precise listing of documentation and other requirements needed to close• Suggesting a guarantee—explaining to the buyer the necessity of personally guaranteeing the seller’s promissory note• Exploring creative terms—to increase the price of your business • Developing a counter offer, if needed

coNDUctiNG DUE DiliGENcE

Avoid costly mistakes and deal breakers

Morgan & Westfield has brokered many successful and mutually beneficial transactions. We know that most mistakes and deal breakers occur during due diligence. As your intermediary, we serve as a catalyst, helping you avoid setbacks and ensuring that your sale maintains momentum and closes quickly. We’ll help you anticipate buyer requests, avoid problems and eliminate surprises. Ways we accomplish this include the creation and compilation of:

• A Due Diligence Checklist and Contingency Sign-Off• A strict timetable to ensure confidentiality• Due Diligence Materials and Book

A purchase offer is often followed by a request for documents such as these: DiD yoU kNow?

• Financial and bank statements• Tax returns• Sales tax reports• Seller’s disclosure statement• Customer contracts• Payroll records• Insurance Policies• Condition of equipment

• Equipment leases• Outside contracts• Premise lease• Operational policies• Environmental reports• Supplier contracts• Franchise agreements• Employment agreements

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assistiNG witH BUyEr FiNaNciNG

Helping serious prospects become satisfied buyers

With your permission, we will help qualified, high-quality buyers arrange financing, including accessing equity they have in their home or retirement plans.

• Preparing for preliminary lender interview and application• Explaining pre-qualification requirements• Business Plan & Projection (often required by lenders)• Dealing with preferred lender representative• Consideration of a seller’s promissory note• Drafting escrow Instructions• Aid with other third-party sources

closiNG tHE salE

Expediting a smooth, litigation-free transaction

Successfully closing the sale of a business requires a coordinated commitment by all parties to the use of tried and true legal documentation. Participants are rewarded with lower legal fees, fewer unwanted surprises and a mutually satisfactory and profitable purchase experience. As your chosen intermediary, your Morgan & Westfield broker provides expert services and support that includes:

• Drafting escrow instructions • Clearing outstanding contingencies• Preparing escrow company document package • If applicable: obtaining Franchisor Approval and lease assignment • Developing an orderly turnover plan• Drafting allocation of purchase price• Negotiating equitable closing costs and escrow fees• Coordinating activities between attorney, landlord, CPA, insurance agents and escrow officers



managing the selling process

DESIRE FOR INFORMATION ON SELLING PROCESS

DATA GATHERING AND OWNER INTERVIEW

RECAST FINANCIAL STATEMENTS

PREPARE VALUATION REPORT

REPRESENTATION AGREEMENT

PREPARE CONFIDENTIAL

BUSINESS REVIEW

PLANNING

ACTIVATE BUYER SEARCH PLAN

SEARCH

SCREENRESPONSES

FINANCIALLYQUALIFY BUYERS

OBTAIN CONFIDENTIALITY NON-DISCLOSURE

AGREEMENT

PRESENT CONFIDENTIAL

BUSINESS REVIEW

DETERMINE BUYER INTEREST

DEAL MAKING

BUYER VISIT FIRST MEETING

PROBE BUYER INTEREST

MOTIVATE BUYER TO ACT

OFFER TO PURCHASE

FACILITATE NEGOTIATIONS

AGREEMENT IN PRINCIPLE

CLOSING

COORDINATE DUE DILIGENCE

LOAN REQUEST PACKAGE

LENDER INTRODUCTIONS

ASSIST IN RESOLVING ALL ISSUES

DEFINITIVE PURCHASE

AGREEMENT (DRAFT)

REVIEW FINAL DOCUMENTS

CLOSE

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Exclusive Quick Close ProgramIf you qualify, Morgan & Westfield can help you close the sale of your business in as little as one week, once a legitimate offer is received. Though there are always numerous factors at play in any sale and no deal is ever guaranteed, the Quick Close Program can help you be ready to move when the right opportunity knocks.

Eligibility REquiREmEnts

To qualify, you must meet the following requirements before your company goes on the market:

1) The businesses must be listed within 15% of the Most Probable Selling Price. 2) The seller must be willing to accept a reasonable enough down payment with an amortization of the balance that will still provide a potential buyer with a living wage and return on his investment. 3) The seller must be willing to pay for a U.C.C. search prior to putting the business on the market. 4) The seller’s landlord must be contacted to verify the lease information and get a pre-approved assignment of the lease. 5) The seller’s attorney must be contacted and must be willing to cooperate with the program. 6) A complete list of furniture, fixtures, and equipment and inventory must be prepared. 7) A seller’s disclosure statement must be completed. 8) A credit report must be obtained from Dun and Bradstreet on the seller and his business prior. 9) All other required documents must be in the broker’s file (including but not limited to):

• Financial Statements (3 years)• Tax Returns (3 years)• Copy of property and equipment leases• Employment agreements• Documents supporting add-backs

• Interim financial statements and current balance sheet• Copy of any encumbrances, liens, or other indebtedness on the business


quick closE pRogRam — sample buyer letter

The following is sample letter template we often use to inform buyers of the Quick Close Program:

Dear Buyer,

When a business qualifies for our Quick Close Program, it falls within our very strict pricing range. It also means that have done a lot of preliminary work to ensure that no unwanted or unpleasant surprises surface during your purchase.

If the company you want is part of this program, you can rest assured that a Morgan & Westfield Professional Broker has:

• Spoken with the seller’s landlord and attorney (or escrow company)

• Verified lease status

• Conducted a preliminary UCC search (title search)

• Completed a seller’s disclosure statement

• Confirmed the owner’s commitment to sell

Of course, you must carefully review this or any other opportunity to be satisfied it fits your needs. But if you choose a business from our Quick Close Program, we can assure with reasonable confidence that you’ll enjoy a speedy, rewarding, trouble-free transaction.

Sincerely,

Morgan & Westfield


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AdvantagesOf Using a Broker:

The only thing more misunderstood than a business broker’s role is the full extent of the

value they bring to the selling process. The most effective brokers possess broad-ranging,

multi-disciplinary knowledge, from real estate, escrow and tax law to marketing, finance and

psychology. In the course of a sale, the broker is equal parts business expert, diplomat and

trusted confidant—someone you can rely on to act in your best interest from the first buyer

inquiry to the day your deal closes.

If you have the time and patience—and enough experience to weather the rigors of a potentially protracted sell—including valuation, due diligence and one-on-one negotiations—it is possible to sell your business without a broker. The advantage, of course, is that at the end, there’s no fee to pay. For the vast majority of owners, however, retaining an experienced, professional intermediary is a wise and prudent decision that can easily repay the fee they earn many times over.



Time SavingS

• IntervIews and showIng: A broker handles all buyer inquiries, conducts the preliminary interview, arranges showing times, answers questions and gives you the opportunity to focus on operations, cash flow and profitability.

• screenIng and QualIfyIng: By doing a preliminary interview and asking the sensitive questions, a broker can identify and reject curious “tire kickers” and others who lack the intent or resources to successfully conclude the sale.

ObjecTiviTy

• showIng and negotIatIng: Competent, committed intermediaries know that (for their client’s benefit), they must maintain an objective, unemotional position that creates a buffer between seller and the buyer. This objectivity enables the broker to more accurately interpret buyer’s motivations and behaviors and adjust tactics to maximize the seller’s benefit.

cOST SavingS and ROi

• PrIcIng: Studies show that using a business broker results in a higher price than when owners sell on their own. Most buyers are reluctant to purchase directly from a seller. Most, however, believe that a professional broker is more likely to structure a safe, mutually beneficial transaction.

RiSk avOidance

• lItIgatIon: Though you alone are liable for the accuracy and veracity of all information you provide, the broker’s knowledge of how your business was “packaged” for sale may help you and your attorney avoid or settle unexpected disputes.

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Specialized knOwledge and expeRTiSe

• MarketIng, advertIsIng, ProMotIon: An experienced broker will have the marketing skills and knowledge necessary to advertise and promote your business, including managing media planning, search engine optimization and ad writing.

• escrow suPPort: The closing is handled through an escrow procedure. Documents are provided to both parties for review by their prospective attorneys before the closing occurs. The business broker can provide tried- and-true legal documentation that reduces the need for attorney fees.

• Buyer fInancIal assIstance: A seasoned broker with an established resource network can often direct prospective buyers to financing sources beyond the SBA and second-mortgage money. In certain circumstances, intermediaries can identify financing alternatives that facilitate a sale that otherwise might not take place.

• sellIng MeMoranduM: Your broker should prepare a detailed selling memorandum for each company they put on the market. They know exactly what buyers expect to see and how to organize information in a clear, compelling format that attracts interest and inspires action.

• valuatIon knowledge: Brokers have the valuation knowledge and experience necessary to maximize the value of your business, including recasting financials. They will prepare a detailed report that includes several valuation methods, and provide a range of legitimately defensible values that often results in a higher selling price.

expeRience and pROfeSSiOnaliSm

• MultI-sPecIalty coordInatIon: An experienced broker knows how to coordinate and control sell-side and buy-side activities with various specialists and advisors, which can save time, reduces risk and facilitate a quicker close.

• confIdentIalIty: For obvious reasons, customers, employees, suppliers and competitors need not know that a company is for sale. Competent, professional brokers know this and exercise the utmost care in maintaining confidentiality when marketing your business. To assure the integrity of your operation, a professional intermediary will never openly publish your company’s name.

• follow uP: Buyers expect to deal with intermediaries. Since your broker handles all follow up, you, the seller, maintain position of greater strength, control and leverage.

• access to More Buyers: Professional brokers typically have access to large international buy/sell databases. The owner wishing to sell a business does not. This is a distinct disadvantage. If a prospect loses interest, the seller loses the sale, and must start the process anew. Because brokers have a steady flow of inquiries, they’re able to quickly replace unengaged buyers with others who may have an immediate interest.


Preparing Your Business for the Sale

While the discovery questions below may not apply in all situations, they can help you create

a customized plan to optimize the value of your business and the price you get for it. Ask your

Morgan & Westfield broker which apply to your unique selling strategy.

ask the right questions. get the right price.


Is the busIness scalable?

Does the busIness have a DIversIfIeD customer base?

If one customer accounts for more than 10% of the total base, a buyer often gets nervous. In almost every deal, this question appears.


Scalability refers to your ability to rapidly grow your customer base without significantly increasing your fixed costs. It can create high leverages in terms of value.

are you anD your customers “too close?”

A close personal relationship with your customers can spell trouble to a buyer. What happens when you exit the business and the buyer does not have this relationship?

Does your revenue moDel revolve arounD a repeatable Income stream?

Repeatable income streams create value. But not all businesses have repeatable income sources. Still, it’s a question worth considering. They’re more applicable in a relatively small market. Examples include your dentist (every six months) or the insurance business.

Do you have multIple proDucts that you can sell or Develop?or are DepenDent on a sIngle proDuct lIne?

Businesses that have a more diverse line or products or services often sell for more.

are your gross margIns IncreasIng or DecreasIng?

A decreasing gross margin may indicate competitive pressure on pricing. If gross margins are decreasing, perhaps you can shift revenue to a more profitable product line.

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Do you have stanDarDIzeD processes anD proceDures whIch can easIly be followeD?

Buyers are looking for an established system to reduce their management time.

Is your busIness a turnkey operatIon?

Businesses that can be purchased “turnkey” often bring in strategic buyers who may pay more than a financial buyer. If a business “runs itself ” without you, this can translate into a higher price. Stay away from the business and see what tasks could be assumed so that you can work on the business rather than in the business.

are your fInancIal recorDs presentable?

Sloppiness or the lack of clear financial information and records can be a value deflator when selling a business. Is your internal staff or CPA preparing records that are clear, presentable, and consistent? If so, your chances of a successful sale will improve considerably.

Do you have a management successIon plan?

The lack of a management succession plan with formal cross-training can be a major negative for the buyer.

Do you have a roaDmap for growth?

You don’t necessarily need a formal business plan but you do need a roadmap for growth. Your intermediary should address this in your Offering Memorandum.

Is there any lItIgatIon agaInst the company?

If you have pending litigation, especially in small to middle market companies, buyers often are extremely nervous and may demand holdbacks to address settlement amounts.



what type of growth has your company been experIencIng?

Many buyers study financial ratios of an entire industry and will criticize your business using these ratios. Check to see how you compare with others in your industry.

how often Do you “clean house” In your busIness?

It may sound trivial, but poor housekeeping shows possible deferred maintenance, safety considerations and other concerns. A little paint and organization goes a long way. Remember, sloppiness brings down value. You could leave a lot of cash on the table by ignoring cleanliness.

what Does your offerIng memoranDum look lIke?

When you make the decision to sell your company a poor Offering Memorandum doesn’t place you in a position of strength. You have spent years building your business and doing a poor job of presenting it is a disservice to you and to your stakeholders.

Do you have a DIversIfIeD supplIer base?

You do not want a key supplier to hold you hostage. This is a very common question from buyers.

are your employee salarIes over market level?

This can be a major turnoff to a potential buyer. Profit sharing programs are fine but when the base is out of line with market salaries many buyers will look elsewhere.

Do you have job DescrIptIons for all employees?

Clearly defined roles and responsibilities are essential in an effectively run organization. Loosely defined positions can create ambiguity in the mind of a buyer.

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have you lookeD at your famIly compensatIon?

Buyers often look at several items in this category. An owner may have a very low salary to suggest that the company is profitable. He may also be using business assets for personal use. These issues are quickly picked up by sophisticated buyers and are sometimes are grounds for an early exit. There are also cases where family members are on the payroll but not active in the business. Non-operating assets are common, but do nothing to motivate a buyer.

how are your customer satIsfactIon ratIngs?

Companies that can show quantifiable data from surveys from customers have a chance to receive a much higher value.

Do you run your busIness from a percentage basIs?

Showing percentage of costs devoted to labor and other items shows you have a handle on the business for comparisons from year to year.

how have you Done wIth your Intellectual property?

This can be a real bonus especially if it adds significant barriers to competition. Do you have a solid patentable position that may lock out competitors?

are there barrIers to entry In your InDustry?

A great location, proprietary products or stable customer base all pose significant barriers to entry. When presenting your business for sale, all these items help to create value in the eyes of the buyer.

Do you have many new proDucts?

A constant flow of new product offerings brings excitement and opportunity to the business. Leaders in specific niches usually are active in new product launches, new ways of adding services and many other positive additions.

how Do your fInancIal ratIos look?

Sophisticated buyers often look at financial ratios and compare them to leaders in your segment. A strength/weakness/opportunities/threats (SWOT) assessment is often performed. Typically, current ratio, inventory turns, total asset turnover, sales/fixed assets are all carefully scrutinized.



Do you have geographIc DIversIfIcatIon?

Buyers look both at regional and nation trends. Employment rates and other factors differ from region to region. If your business is located across several geographic areas, you may have a value enhancement factor.

how are you DoIng wIth your aDvertIsIng anD marketIng buDgets?

Buyers like to see advertising budgets maintained prior to the sale of a business. Maintain all of your advertising and marketing, especially Yellow Pages.

have you recently IncreaseD prIces?

A price increase often falls right to the bottom line and rarely results in the loss of customers. Strong pricing and margins and very attractive to buyers. Buyers do not like to be in the discount business.

how vIsIble are you In the InDustry?

Buyers like to purchase companies that have a good reputation and industry visibility. What can you do to increase your reputation and profile?

Do you have a passIon for qualIty?

Fast food chains know all about the need for quality. Strict, repeatable built in quality controls bring confidence and value to a buyer.

how current Is your accounts receIvable leDger?

Aging accounts make buyers very weary. Write off old accounts and stay on top of current paying customers.

Do you have agreements wIth your key personnel?

Buyers typically like to be assured that key employees will stay after the sale. Employment agreements with top people can increase the value of your company in the eyes of the buyer.

how olD are your projectIons?

Buyers like to see reasonable projections outlining strategies for growth. Have your CPA or intermediary prepare credible projections with variable growth rates for your company.

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attributes that motivate buyers action plan: does this apply to your business?

• Consistent profit for two or more years [ ] yes [ ] no

• No unresolved legal problems [ ] yes [ ] no

• Proof that accounts receivable can be collected [ ] yes [ ] no

• Clear and consistent accounting protocols [ ] yes [ ] no

• Convincing business plan for the next few years [ ] yes [ ] no

• Solid relationships with suppliers and customers [ ] yes [ ] no

• Commitment of experienced employees to stay with the business [ ] yes [ ] no

• Long-term lease at a favorable rent [ ] yes [ ] no

• Complete disclosure of all relevant information [ ] yes [ ] no

• Honest business practices [ ] yes [ ] no

• Attractive and organized business premises [ ] yes [ ] no

• Current inventory that’s in good condition [ ] yes [ ] no

• Business and office equipment that is in good condition [ ] yes [ ] no

• Clear list of noncash perks, such as business-related travel [ ] yes [ ] no

• Sensible or convincing reason for sale [ ] yes [ ] no

• Organized paperwork, including cash flow records, tax returns, leases and important contracts, and documents such as entity records [ ] yes [ ] no

• Other: _______________ [ ] yes [ ] no

The first step in selling a business is preparing it for sale. Following is a brief checklist of some of the most common areas to consider in preparing a business for sale. In certain circumstances, we may work with the Service Corps of Retired Executives to assist in preparing the business for sale and to maximize the value of the company. If you have key employees that are essential to the continued operation of your business, it may make sense to incentivize those employees to stay through the sale of the business.

checklIst of Important pre-sale tasks


Valuation:Getting the Right Price For Your Business

Value is related to risk and to the ability of the business to generate an income stream that is

comfortable for the buyer. The value of a business depends on the needs and perspectives of

each individual buyer.

• Review and evaluate hard assets

• Recast, normalize, confirm and review financial statements

• Identify factors that can impact future earnings

• Select the appropriate valuation method

• Calculate and apply external factor discounts

to accurately assess the value of your business, you and your Broker will start with these basic steps:



VALUATION METHODS

While there are many different valuation methods, most fall into one of the following categories. Your Morgan & Westfield Business Broker can help you determine which method is most beneficial for you:

• Cost of Assets: this method bases the value according to the value of its assets: all equipment, furniture, fixtures, inventory, supplies, etc.

• InCoMe/eArnIngs: this method is predicated on the amount of income the business can produce for the potential buyer

• MArket/CoMpArABle sAles: this method looks at sales of comparable businesses bases on gross revenue and net profit and other rules of thumb

• two to three times annual discretionary cash flow/earnings*

• fair market value of equipment and inventory, plus 18 months of discretionary cash flow• A percentage of annual gross sales (25%-100%)

In many cases we see some common averages of what businesses sell for, for example:

THE VALUATION “SANITy TEST” The figure you set must answer these questions:

• Does it adequately cover debt service?• Does it provide a reasonable income for the buyer?• Does it allow for working capital fluctuations?

Businesses with a negative cash flow may not pass the sanity test but may be a good acquisition for the right buyer. these types of opportunities make the most sense for an industry buyer or someone who has experience in your industry. novice buyers will be too intimidated and lack the experience to buy a turnaround opportunity. expect the acquirer to offer you an “earn out,” or a percentage of future sales.

TUrNArOUND OppOrTUNITIES

(*Discretionary earnings is defined as the owner’s total compensation. this includes owner salary, net profit, deducted interest, depreciation plus other benefits, such as luxury automobiles, excessive insurance, exotic travel and family bonuses that have been charged off as business expenses.)

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Many courts and the Internal revenue service have defined fair market value as: “the amount at which property would exchange between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of relevant facts.” You may have to read this several times to get the gist and depth of this definition.

the problem with this definition is that the conditions cited rarely exist in the real world of selling or buying a business. for example, the definition states that the sale of the business cannot be conducted under any duress, and neither the buyer nor the seller can be pushed into the transaction. such factors as emotion and sentimental value cannot be a part of the sale. surprisingly, under this definition, no actual sale or purchase has to take place to establish fair market value. that’s probably because one could never take place using the definition. so what does make up the value of a privately-held business? A business consists of tangible and intangible assets. the tangible assets are the most visible and the ones on which buyers too often base a judgment on the value of a business. As factors of value, fixtures, equipment and leasehold improvements are often valued first by the buyer. Well maintained equipment and attractive interior surroundings are the first things a buyer sees when visiting a business for sale. Make no mistake, regardless of what prospective buyers may say, the emotional impact of a physically well-maintained business can be a very positive factor. In addition, it is much easier to finance tangible assets than intangible ones.

However, buyers have to consider what is really behind those well-maintained tangible assets. there are many businesses, especially today, in which physical assets play a very small part in the success of the business. these intangible factors include: the business’ reputation with its customer or client base, and within its industry; mailing lists and customer/client lists; quality of product or service; reputation with its vendors and suppliers; strength of the business’ technology and other systems; plus many other factors that can add a lot more value to the price of the business than can shiny equipment. Although the intangible assets listed above cannot be seen, they are certainly an important part of the business - and purchase price. Businesses that don’t need expensive fixtures and equipment can, in many cases, be expanded more quickly and inexpensively because they do not require cash-intensive equipment purchases. Buyers, to their own detriment, do not want to pay the same price for equivalent cash flow for businesses that do not have lots of equipment. they want to buy tangible assets. Business brokers and intermediaries know how to point out to prospective buyers the advantages of businesses that may not require lots of equipment but have those all-important intangible assets that create steady cash flow. Business owners who have a service or other type of business that does not rely on the heavy use of tangible assets and are considering selling, should talk to their professional business broker/intermediary who can point out the pluses and the hidden assets of the business.

HOw bUSINESS ASSETS INfLUENcE

bUSINESS VALUE(excerpted from Business Broker press, 2008)

(Copyright 2008 Business Brokerage press)



VALUE DrIVErSfactors that can affect value and selling price

• Quality and sustainability of earnings

• Controls and internal systems in place

• Industry trends — cyclicality, seasonality

• Customer concentration

• growth rate

• Market — stability, potential

• Capital expenditures

• Barriers to entry

• supplier concentration and dependability

• employment contracts

• profit margins

• product differentiation

• Market share

• Cost advantages

• Business type — commodities, technical, competitive

• repeat customers

• Quality of management

• terms of sale

• size

• Years in business

• Ability to finance the sale

• requirements of franchisor or dealer

• the general economy

• license requirements and regulatory issues

• financial results (sale, margins, net, supportable earnings, trends, working capital requirements)

• key performance indicators — # inventory turns, A/r to sales

• scalability/Upside potential and related additional investment required

• facility lease (rate vs. market, renewal options, landlord reasonableness)

• Marketability, demand, availability of buyers with the necessary skill set

• seller after sale issues (training/ mentoring, consulting, non-compete)

• Competitive threats (internet, franchises, industry leaders)

It is critical to consider all of the value drivers. In valuing a business it is important to take all of the factors below into account.

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If you’re like most owners, you’ve operated your business in a way that’s calculated to minimize taxes. You may have given yourself and family members as many perks and benefits as possible, kept offspring on the payroll, plowed profits back into capital improvements, etc. these and other common practices are designed to keep your profits (and your taxes) low, perhaps artificially so. But the need to “recast” or recalculate earnings arises when you decide to sell.

removing owner-specific perks, benefits and expenses will make your company look as profitable as possible. If time does not permit (or in addition to) this step, you can have your broker adjust (recast) your past income statements to reflect your financial condition if you removed from them:

• Your salary and perks, and those of family members you don’t expect to remain with the company

• expenses or income that would not be expected to recur or continue after the sale (for example, income or expenses associated with discontinued products, or gains or losses from the sale of any business assets)

• Investment or other non-operating expenses or income

• Interest payments on any business loans, since you’ll be removing such liabilities from the balance sheet.

• owner health insurance, life insurance, auto expenses, etc.

rEcASTINg fINANcIAL STATEMENTSpresenting an accurate picture of your company’s actual earnings


SAMpLE ADJUSTED INcOME STATEMENTfor the year Ended December 2007

Statement adjuStment ReviSed

income $ $ $ gross sales 5,090,578 0 5,090,578 other Income 0 0 0total income 5,090,578 0 5,090,578

Cost of Goods Sold 3,840,899 250,4701 3,590,429

Gross Profit 1,249,679 250,470 1,500,149

expenses Advertising 22,045 2,5102 19,545 Auto 36,787 35,4303 1,357 Bad Debt 128 0 128 Computer service 6,907 0 6,907 Contributions 1,697 1,6974 0 Dues & subscriptions 3,845 3,8455 0 fuel 4,992 4,9926 0 Insurance 35,104 6,3217 28,783 licenses & permits 2,680 0 2,680 Misc. 4,593 4,5938 0 office supplies 48,993 6,1129 42,881 office Wages - 1099 10,237 0 10,237 payroll expenses 163,550 0 163,550 payroll taxes 96,890 13,60010 83,290 payroll Wages - office 258,802 136,00011 122,802 postage & Delivery 1,102 0 1,102 printing & reproduction 4,637 0 4,637 professional fees 9,540 0 9,540 rent 130,674 2,51012 97,146 repairs & Maintenance 9,970 0 9,970 Depreciation 4,060 0 4,060 taxes 7,069 0 7,069 telephone 1,888 1,88813 0 Uniforms 6,244 6,24414 0 Utilities 4,208 0 4,208 Workers Compensation 3,042 0 3,042

total expenses 879,694 622,934

net Profit/Sde (Before taxes) 169,985 476,212 646,197


1 $3800 – Installers no longer paid to measure, job now performed by salespeople. Cogs from another unrelated business.2 non–Business expense.3 owner’s personal vehicle.4 non–business expense.5 non–business expense.6 owner’s personal vehicle expenses.7 Dental insurance no longer provided for employees $2705. owner’s health insurance $3616.8 non–business expense.9 office supplies paid by salesmen $6,112.10 sales Manager’s payroll taxes $4,800. friend’s payroll taxes $2,800. owner’s payroll taxes $6,000.11 sales Manager duties assumed by owner $48,000. excess wages paid to friend $28,000. owner’s salary $60,000.12 rent reduction in new facilities by $2,790 per month.13 owner’s personal cell phone.14 Uniforms no longer paid for employees.

NOTES TO fINANcIAL STATEMENTS


AdvantagesOf Financing the Sale:

In the U.S., people rarely buy a business for all cash. In fact, studies show that the most

successful and profitable transactions are financed by the seller. Your Morgan & Westfield

broker is intimately familiar with the numerous advantages and benefits of seller-backed

financing, including those listed below.



• Lower taxes: Youonlypaytaxesonmoneythatyoureceive.Whenfinancing thesale,youdonotpaytaxesuntilyoureceivethemoney.Ifyoureceiveall cash,youmaybepushedintothehighesttaxbracketfortheyear.

• HigHer seLLing price: Financingthesaleoftenresultsinahigherprice,often 10-20%moreforthesamebusiness.Ifyousellforallcash,youmustreducetheprice 10-20%.InastudydonebyBizComps,all-cashsellersreceived69.9%ofaskingprice, whileseller-financedbusinessesreceived85.7%ofaskingprice.

•greater cHance of seLLing:Fewpeoplepayallcashforabusiness.Ifyou financethesaleofyourbusiness,youdramaticallyincreasethechanceofitselling andexpandtheuniverseofbuyersabletoconsiderpurchasingyourbusiness.

•ongoing casH fLow: Withsellerfinancing,it’snotunusual toreceiveregularpaymentsforuptoeightyears,includinginterest.

•More favorabLe rate:Yourrateofreturnisoften8-10%, higherthanyoucouldreceiveinvestingyourmoneyelsewhere.

•greater buyer confidence: Thebuyerwillhavemoreconfidenceinyour businessknowingthatyouarewillingtofinancethetransaction.Thisexpeditesthesale andresultsinahighersellingprice.

• increased borrowing power:Brokersgetbombardedbypeoplewilling tobuysellernotes.Afterseasoningthenoteforsixmonths,youcanoftensellitif youneedthecashforasmalldiscount.

• faster cLosing: Atminimum,bankfinancingtakessixweekstoclose.With sellerfinancing,youcanwrapupthesaleinaslittleasafewdays,decreasingthe changethatthedealwillfallapart.

•guaranteed protection:Sometimesthebuyeriswillingtopersonally guaranteethenote,allowingyoutosueifyouhedefaults.Youalsogetthebusiness backandcanquicklyresellitatadiscounttorecovertheremainderofyourmoney.

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reduce riskby thinking like the bank

Historically,only a very small percentageof sellernotesdefault,making the arrangementsaferandmoresecurethanmostsellersrealize.However,whencarryingthenoteyoustillneedtobeprudentandthinklikeabank.Herearesomesimple,provenguidelinestohelpensureasmoothtransitionandregular,timelypayments:

• find tHe rigHt buyer:Easiersaidthandone,especiallywithoutaProfessional BusinessBroker.Aconscientiousbrokerwillprovideyouwiththeprospectivepurchaser’s creditreport,resume,personalreferences,andalistofbankingrelationships.

•offer paLatabLe terMs:Givethebuyerreasonableenoughtermssothat hecanmakealivingandstillaffordtopayyou.

• provide adequate training: Thenewbuyerdeservesagenuineopportunity tosucceed.Thiscanbeginwithpropertrainingandaclearunderstandingofhowyour businessruns.

•incLude an “evergreen” cLause: Requirethebuyertomaintainaminimum levelofinventory.

•receive reguLar stateMents:RequirethebuyertoprovideCPA–prepared financialstatementsasoftenasyoulike.Thisallowsyoutokeepyourfingeronthepulse ofthebusinessandifnecessary,comeintorescueanirresponsiblebuyer.


a million dollar illustration

Thefollowingexamplecomparesannualandtotalfundsreceivedbetweenaseller-financedsaleandonethat’sallcash.BasedonaBizCompsstudy,itshowsthatsellerswhooffertermscanreceiveasmuchas85.7%oftheaskingprice,whilebusinessessellingforallcashreceiveconsiderablyless—typically69.9%oftheaskingprice).Theexampleisbasedonapriceof$1million.Pleasenotethatthisdataispresentedasanexampleandnotapromiseorguaranteeofreturns.

selling price w/terms $857,000

selling price — all cash $699,000

Amortizationassuminga50%downpayment($428,500)at10%interestamortizedover60months(5years):

Year 1 $109,251 $537,751

Year 2 $218,503 $647,003

30 months $273,130 $701,630

CumulativePayments(interest and principal)

TotalMoneyReceived(including down payment)

Afterjust30months,youwouldhavereceived$701,630intotalpaymentsincludinginterestandprincipal.Thisexceed/equalstheamountyouwouldhavereceivedhadyousoldforallcash.Ittakesjust30monthstoequalthepricehadyousoldforallcash!Therest,astheysay,isgravy.

Year 3 $327,756 $756,256

Year 4 $437,008 $865,508

Year 5 $546,261 $947,761

the bottom line: nearly a quarter million dollars more

Afterfiveyears,youwouldhavereceived$947,761intotalpaymentsor$248,761greaterthanhadyousoldforallcash,resultingina35.59%increaseinprice!

[NOTE:Theaboveillustrationisanestimateonly,anddoesnotincludeestimatesfortaxes,broker’scommission,liabilitiespaidatclosing,andotherclosingcosts.Asellershouldperformhis/herowncalculationalongwiththeirCPAindeterminingthemostsuitablefinancingstructure.]

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$947,761 - $699,000 = $248,761 excess if you carry the note !


Frequently Asked Questions:

There’s no question that selling your business is a major decision! You’ve devoted your time,

money, and energy to building and running an operation that may well represent your life’s

work. Now, you’ve decided to sell and want the very best professional guidance possible. Now

is when working with a professional business broker can make the difference between just

getting rid of a business and selling it for the very best price and terms.

The following are some of the most common questions asked by sellers. The responses are

based on years of experience and knowledge. If you have a question that’s not listed here,

please let us know.


Question: What can Business Brokers do — and What can’t they do?

Answer: As your business broker, we can help you decide how to price your business and how to structure the sale so it makes sense for both you and the buyer. We can find the right person to buy your business and work with each of you, every step of the way, until the transaction is successfully closed. We can also help the buyer in all the details of the business buying process.

What we can’t do is sell an overpriced business. Most businesses are salable if priced and structured properly. You should understand that only the marketplace can determine what a business will sell for. The amount of the down payment you are willing to accept, along with the terms of the seller financing can greatly influence the ultimate selling price, as well as the success of the sale.


Question: hoW long does it take to sell my Business?

Answer: It generally takes on average, six to twelve months to sell most businesses. Some will take longer, while others sell in a short period of time. The sooner we have all the information needed to begin the marketing process, the quicker the sale will be completed. It is also important that the business be priced properly right from the start. Some sellers, operating under the premise that they can always come down in price, overprice their businesses. This theory often “backfires”, because buyers often will refuse to look at an overpriced business. It has been shown that the amount of the down payment may be the key ingredient to a quick sale. The lower the down payment, generally 40% of the asking price, or less, the shorter the time to a successful sale. A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make the payments.

Question: Why is seller financing so important?

Answer: Surveys have shown that sellers who ask all cash receive on average only 70% of their asking price, while sellers who accept terms receive on average 86% of their asking price. That’s a 16% difference! In many cases, businesses that are listed for all cash simply don’t sell. With reasonable terms, however, the time period from listing to sale greatly decreases. Most sellers are unaware of how much interest they can receive by financing the sale of their business. In some cases, it’s quite significant.

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Answer: When a buyer is sufficiently interested, we will help prepare an offer or proposal, which may contain one or more contingencies. Usually, this includes a detailed review of your financial records, review of your lease and franchise agreement, and other pertinent details of your business. When the buyer’s proposal is presented for consideration, you may accept the terms or make a counter-proposal. If you do not accept, the buyer can withdraw any time. We will submit all offers for your consideration. At first, you may not be pleased with a particular offer but it may contain some plusses to seriously consider. There is an old adage that says, “The first offer is generally the best one the seller will receive.” This does not mean that you should always accept the first offer, or any offer for that matter, just simply that every offer should be carefully reviewed.

When you and the buyer agree, we will work with both of you to satisfy and remove any contingencies. It is important that you cooperate fully in this process. You don’t want the buyer to think that you are hiding anything. The buyer may, at this time, bring in outside advisors. When all conditions have been met, final papers will be drawn and signed. Once the closing has been completed, money will be distributed and the new owner will take possession. As your business broker professional, we will work with you throughout the process.

Question: What happens When there is a Buyer for my Business?

Question: What can i do to help sell my Business?

Answer: You can cooperate fully with us and any other professionals you are using. A buyer will want up-to-date financial information. If you retain an accountant or bookkeeping firm, you can work with them. If you are using one, make sure your attorney is familiar with the business closing process and the laws of your particular state. You might also ask if their schedule will allow them to participate in the closing on short notice. If you and the buyer want to close the sale quickly, you don’t want to wait until the attorney can make the time to prepare the documents or attend the closing.

Time is of the essence in any business sale. The failure to close on schedule permits the buyer to reconsider or make changes in the original proposal. And finally, your team of advisors must all be working towards the common goal of selling your business for the best price and terms available in the marketplace, and closing the sale as quickly as possible. Remember that, as your professional business broker, we are on your side. Only through your full cooperation can we best handle your business interests.



Answer: • Provable books and records• Reasonable price• Leverage and terms• Living wage• Furniture, fixtures, and equipment• Lease

• Training• Appearance• Covenant not to compete• A good reason for sale• Time is of the essence• No last minute surprises

Question: What do Buyers look for?

Question: When is the Best time to sell my Business?

Answer: The best time to sell is when the business is doing well. Selling during difficult economic times is much more challenging.

Question: hoW much is my Business Worth?

Answer: A company’s value depends on many factors: cash flow, assets value, and financial history, condition of equipment and premises, lease attractiveness, competition, potential for improvement, location, industry, and economy. Most importantly, value is determined by its ability to provide the buyer an adequate wage to live on and cash to retire the debt.

Question: can a real estate agent sell my Business?

Answer: It may be difficult. Business brokers are licensed to sell real estate but most real estate agents do not know how to sell businesses. The techniques of pricing, selling and putting together the business transaction are altogether different from selling houses or commercial property. It is virtually impossible for a real estate agent to get the confidential exposure to qualified buyers that a business brokerage firm can get.

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Question: What aBout the accomplishment fee?

Answer: We only collect our fee when the business is sold. We pay all costs involved with advertising, qualifying buyers and bringing the right buyer to closing. Most sellers have found that the cost of using our services are more than offset by the value to be gained from taking advantage of our expertise and access to qualified buyers. Sellers have found that because our buyers historically offer more for businesses, the net proceeds to the seller (after fees are paid) are usually more than what a seller could have negotiated independently.

Question: Wouldn’t i Be Better off listing my Business With several intermediaries?

Answer: The key to getting top dollar is the ability to negotiate with two or more buyers to get them to enhance their bids, thus taking full advantage of any synergistic situation. An intermediary cannot effectively negotiate with buyers without full knowledge of all bids and the status of each. Therefore, one person must control the negotiations. Experienced, professional intermediaries will not usually work on a project where they have no control.

other disAdvAntAges:

1) Loss of control of confidentiality – in exponential ratio to the number of intermediaries.

2) Buyers may receive offering notices from more than one intermediary – with the result that the offering gets shopworn and the buyers quickly lose interest.

3) A non-exclusive intermediary will be competing to have his/her buyer be successful. The result is that the intermediary, in effect, represents the buyer and the seller ends up with no representation even though the seller is paying.

4) A non exclusive intermediary has little incentive to qualify buyers. The more buyers presented, the more likely to earn a fee. This results in many unqualified tire kickers taking up your time.

5) The seller with non-exclusive intermediaries will spend countless hours, qualifying, talking, showing, and negotiating, with both numerous buyers and numerous intermediaries. The seller can ill afford to spend unnecessary time when all the sellers’ time should be dedicated to making the business run at peak efficiency in order to achieve top sales dollar.

AdvAntAges:

1) More buyers contacted. That may be true… but not always. Remember that a professional intermediary will do a comprehensive search of all prospective buyers with no duplications. These pros have access to all prospects, so none are exclusively represented. This may not be an advantage, especially if potential buyers are inundated with duplicate offerings from different intermediaries.



Answer: If the giant has bought 60 companies, you can be sure they have looked at over 600 and probably nearer to 6,000. The question is how many have you sold? Unless it’s several, you are at a tremendous disadvantage and need someone to offset this liability. The reason why they don’t want to deal with intermediaries is that they feel they can control the transaction and procure a much better deal by negotiating directly with unsophisticated sellers.

Read the Wall Street Journal. What is the first thing that a company does when it is approached with an unexpected offer. The company hires an intermediary! You should too. As far never working with an intermediary: the suitor has no choice if they want to deal with you. The implied threat is tantamount to saying you can’t have a lawyer assist you. They won’t go away if you hire an intermediary. Besides, how do you know if you got the best price if you only have one unsolicited offer? Bottom line? Hiring an intermediary is a prudent investment that returns the fee you pay many times over.

Question: i have Been approached By an american stock exchange con-

glomerate that has purchased 60+ companies in the last ten years and does

not negotiate With intermediaries. should i go solo to ensure a sale?

Question: should i try first to sell my Business on my oWn?

Answer: Consider the facts below on owner-sold businesses and decide for yourself. • 70% close • 25% give up • 5% sell

disAdvAntAges:

• You will also exclude first time buyer’s as they are too intimidated to buy directly from a business owner • Experienced buyers typically low-ball an owner if dealing with them directly, attempting to steal the business at a very low price • You will lose a lot of time that you should have spent running the business • It will cost you thousands of dollars to advertise the business and on attorney’s fees

AdvAntAges:

• You will save money on the commission

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